Broken Window Fallacy

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This fallacy does not let us distinguish between an arsonist destroying a building and an investor who demolished the building. In either caase something new would be put in its place, often much better.


An important class of exceptions to the broken window fallacy.
Frederic Bastiat's Broken Window Fallacy claims to show that claims of benefits to destruction are wrong. But there are plenty of reasons why there can be strong benefits to destruction: so strong that rational economic actors destroy things all the time.
Bastiat's Broken Window Error [More...]
The broken window analogy fails to explain real world examples, such as how Europe has become so much more prosperous after innumerable wars.
The Real Problem with the Broken Window Fallacy [More...]
"The BWF may or may not be useful for demonstrating a certain point, but it is not a model of the economy and it is not always and everywhere applicable to economic problems."


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